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<p>[QUOTE=&quot;desertgem, post: 1664503, member: 15199&quot;]Again, paper contracts are <b>generally</b> on margin&nbsp; ( the reason there are so many and produces distorted numbers such as the 98% )because they are NOT backed by physical gold UNLESS they are switched to a physical delivery within the time allowance by paying the full price of a contract. These fully paid &#039;paper contracts&#039; are backed by basically 100% gold if held until the contract date. </p><p><br /></p><p>The margined non-delivery contracts, are paper contracts based on paper. They do not have any gold backing other than they will increase or decrease in &#039;paper&#039; money payout when traded. On those ( the vast majority of contracts) are paper bets on paper assets , and not physical gold except as the movement.</p><p><br /></p><p>Physical delivery contracts can also be traded, but the contract value will reflect the current ( spot or exchange basis) value of gold and transaction is in paper money.&nbsp; If carried to the end of the period, the owner will get the gold. These contracts are usually industrial or for ETFs that may need to adjust their assets.&nbsp; Paper contracts do not influence the spot price of gold, the spot price of gold influences the buy/sell/trade of the paper contracts, unless people see a big change ( such as a sell off in ETF shares) as a predictor of spot pricing, spot should be unchanged, because if the holder of ETF shares is Mr. General public, the transaction results in &#039;paper&#039; dollars exchange and NOT physical gold exchange ( only for the partners or basket eligible holder.&nbsp; So if the physical price of PM changes due to ratio of ETF shares, it is because the general PUBLIC thinks that the price is going down, and sells their physical or stackers count their spare change and get ready to buy more. There is a paper game and a physical game. The paper game can only influence the <b>perceptions </b>held by physical holders ( up or down), it can not change the physical game, only the buy or sell of physical should change it.</p><p><br /></p><p>So to stand by my point, If no one buys or sell physical gold outside of a small range, the price should be stable. Demand by buying and selling physical is what moves gold ( whether or not is is influenced by paper transactions or bullion blogs).</p><p><br /></p><p>There could be thousands or millions of paper contracts each day, and in the end , they all cancel out as each is a paper buy/sell transaction resulting in paper money transfers. If some entity sells 3 tons of gold at decreasing levels until done, it will greatly move the days level. </p><p><br /></p><p>Imo.</p><p>Jim[/QUOTE]</p><p><br /></p>

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